How RTB Video Exchanges Will Create A New T/V Business Model

This is the second of two articles addressing why the dramatic emergence of RTB/Ad Exchange buying and selling will significantly influence a broadly accepted, T/V
business model. Part 1 is a primer describing the basics of this
process.

Dramatic growth in “Big Data” is
driving a revolutionary advance in buying and selling advertising media that has several names: RTB (Real Time Bidding/Buying), Media Exchanges, Ad Exchanges, Media Trading. The time-consuming,
far-in-advance, guaranteed direct deals for uncertain upfront and scatter TV inventory (media-centric ad buying) is now making way for a more audience-centric process.

I spoke with Keith Eadie
of leading T/V DSP (demand-side platform) TubeMogul and explored some of the opportunities presented by this rapid shift in the way T/V is purchased. Here’s what I’ve learned from
him and others, supporting why I believe this development will influence the birth of a new business model for T/V:

Guaranteed engagement: Because all premium video starts with a consumer action
(“click-to-view”) where the viewer accepts pre-rolls or mid-rolls as the way to get content, advertisers will be able to measure and evaluate engagement and let go of
“opportunity-to-expose” CPMs.

Interactivity: Features that allow advertisers to efficiently track and purchase viewer behaviors such as
surveys, polls, RFIs (requests-for-information), dealer listings, social media connections and other “drill down” actions are a big plus.

Constant, real-time
adjustments: Traders/buyers can make real-time modifications to buys using sophisticated yet easy to navigate “dashboards”. Local or national buyers with strong relationships to
media sellers are no longer the only way to get effective deals done.

Contextual placement: This real-time video buying puts brand marketers in control
of context -- the sites where ads will run. Any time during a campaign, marketers can tweak the exact sites where their ads are appearing based on where campaigns are achieving goals.

Favorable costs-per-thousand based on engagement: Advertiser value will increase as constant, real-time feedback and adjustments get the message in front of the
right audiences in the right context at the right time.

Heavy lifting becomes lighter: As with any industry that has used automation to increase productivity, more and
better buying can be done with lower staffing costs.

Digital GRPs: Many players are focused on development of a common buying currency, (sometimes called “digital
GRPs”) to help accelerate the use of RTB and video ad exchanges.

Content Creator/Producer Opportunities

Monetization scale:
The aggregations of audiences allow producers to get to a massive global audience across many platforms quickly, and monetize their investments.

Bidding and optimized pricing: Online search has benefited from pricing based on a bidding approach for years. For the first time, central exchanges can
present a total publisher’s video inventory to a massive buying sector in real time.

Content Distributor Opportunity

Competition drives
growth/success/innovation: Traditional distributors (cable/satellite) now face competition from OTT (over-the-top) platforms and providers who most benefit from RTB. Like land-line telcos or
dial-up internet providers in the 1990s, these cable and satellite companies will either grow or die. Whether they are comfortable with that or not, the survivors will be stronger for it.

Better experience: A video-on-demand world with many programming sources, interactivity and small ad-loads is better for
consumers. Also beneficial: lower OTT consumer costs.

Summary

Whether the marketer’s purchase funnel strategy is focused on the top (branding), middle
(developing consideration) or bottom (promoting action), these advances in buying and OTT are softening the silo walls between the various traditional responsibilities for media placement – a
good thing. I am most excited for the engagement opportunities that “click-to-view” pre- and mid-rolls offer along with interactive, “drill down” offerings that serve
consumers as well as advertisers. When viewers willingly provide pre-roll/mid-roll attention in exchange for the content they want, the process starts to look like the quid Pro Quo model I have always believed will be the best chance for all ad-supported
T/V to grow and prosper.